Israel responded to the capture of two of its soldiers by Hezbollah, which carried out a raid across the Israeli-Lebanese border Wednesday morning, by opening up a second front in its military operations, launching missile and bomb attacks from the air and sea and sending troops into southern Lebanon.

The prospect of a full-scale war with Lebanon in the north coincides with escalating Israeli attacks across its southern border in the Gaza Strip. Several hours before the eruption of fighting between Israel and Hezbollah, Israel dropped a quarter-ton bomb on a house in Gaza City, killing a Hamas activist, his wife and seven of their nine children. Palestinian sources said a total of 20 Palestinians were killed in Gaza Wednesday as a result of Israeli military actions.

Three Israeli soldiers were killed in the cross-border Hezbollah raid, in addition to the two who were taken prisoner. Another four Israeli soldiers died in the initial incursion by the Israeli Defence Forces (IDF) into southern Lebanon when an Israeli tank ran over a land mine. A fifth Israeli soldier was killed while assisting in recovering the tank, according to the IDF.

The death of eight Israeli soldiers is the largest single-day toll in many years, and it heightened the atmosphere of crisis surrounding the regime of Prime Minister Ehud Olmert.

The response of the Israeli government was to threaten all out war against Lebanon. Olmert said the border raid by Hezbollah was not merely an act of terrorism, but “an act of war by the state of Lebanon against the state of Israel in its sovereign territory.” He pledged to extract a “heavy price” through “very painful and far-reaching” action, and rejected a call by Hezbollah leaders in Beirut for negotiations on the release of Palestinian and Lebanese prisoners held by Israel in exchange for the return of the two captured Israeli soldiers.

Israel reportedly is holding 9,000 Arab prisoners. The vast majority are Palestinians, but there are also some Lebanese.